The world of online encyclopaedic resources does present some interesting definitions at times, including this quote regarding Generation ‘X’ – “the demographic cohort following the baby boomers and preceding the millennials”, characterised as “cynical and disaffected but active, happy, and achieving a work-life balance, and credited with entrepreneurial tendencies”.
So, who are the Generation ‘X’ – those born roughly between the mid 1960’s and the very early 1980’s – and more importantly, with what would appear to be some suitable timely skills for financial and life planning, why are they defined as facing a “tsunami of financial pressures” and the ensuing challenges?
At a time when the societal infrastructure is experiencing its toughest challenges for many decades, it could be seen that the age range of those expressed in this category, approx 41 to 56, face increased financial and life pressures due to their “sandwiched” position.
The older generations at least had Defined Benefit pensions, meaning their pension pay-out was based on the number of years spent with an employer and the consequent salary earned, the millennials will benefit from automatic enrolment, which took effect in 2012, but those in the Gen X position formed the bulk of the workforce at a time when responsibility for long term savings shifted from employers and state to the individual.
Further compounding of costs come with the caring for children while supporting aging parents who are living longer, and all this within the confines of a relentless pandemic, redundancy affecting more than half a million with 1.3 million incomes diminished by reduced hours, and significant geo-political shifts with Brexit and global trade uncertainty.
Upheaval would be considered an understatement for most of the world right now, and financial planning appears to be almost a contradiction, trying to formulate a strategy in such daily shifting and unstable environments, but it begins by being aware of one’s situation currently, and what may yet appear to add further complexity.
A third of Gen Xers are at high risk of what would be considered ‘minimal’ incomes for their retirements, according to a report recently (November 2020) by the International Longevity Centre UK(ILC) and a further 57% of them recognising the need to save more, yet 6 million of them, if nothing changes in their situations, means being worse off than when their parents retired, which is a very unwelcome prospect indeed.
In contrast to what would appear less of a pending issue for millennials, they have the highest average debt burden and trend wise still spend more on less essential items, yet only 16% say they have included financial planning as a necessary goal, and only 38% mention an improvement in money management and saving, compared to millennials of which 27% have including planning, and 50% who are pro-actively addressing the need to manage their money better. Almost 40% would additionally state they are not fully aware of what they have saved, or will have access to, and seem unaware of what’s required for a modest quality of life in retirement.
More than a quarter still expect state pensions to cover what their essential needs will be and have no further savings or investments of any kind, including gifts or inheritance, and many believe the increases in retirement age will impact their ability to sustain working for that extended period.
While the ILCUK (International Longevity Centre UK) are calling for recognition of these facts and to implement support by the Government, the author of this retirement income prospects for Gen Xers report, Sophia Dimitriadis, has declared that while these findings are precarious and present great insecurity for many people, she states “These challenges require structural solutions beyond the scope of the current pension systems”, adding ”Addressing barriers to working longer will be a particular priority to help the Gen Xers who need to do so”.
Indisputably the emphasis emerges on the importance of knowing what to plan for and what options you have when circumstances or priorities invariably change.
A financial adviser can aid greatly on many levels – short, medium and long term – in planning and solution appropriation, helping with your immediate financial priorities in the context of:
- long term goals
- working with you to review pension pots
- advise on possible investment opportunities
- help calculate pension contributions
- encourage those in self-employment to seek guidance in structuring pension commodities better suited to your unique earning patterns
- utilising available allowance
- review investments that may or may not be fit for purpose
Advisers can essentially give practical and applicable solutions, as well as helping you manage your money to further your financial wellbeing and the goals you want to obtain for yourself, family, and loved ones.